“Pentech” lessons from Japan


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Last year’s stories about Japanese pensioner’s focussed on their propensity to shoplift , get caught and end up in jail (which they favoured over living solitary lives at home).

This blog looks at the problems of financial exclusion faced by Japan’s elderly and the people who look after their money. I’m grateful for much of the content to this excellent article by Mitsuro Obe, which deals with the issues in more depth 

Japan has the oldest demographic in the world. Its over 75’s hold over 50% of Japan’s private wealth (a percentage expected to increase to 60% in ten years). 

The situation is one that poses interesting questions . Only 28% of Japanese personal financial assets are held by people under 55, in Japan the mainstream market is actually the ageing market

Japanese savings have traditionally been held and managed by its banks , these banks are  nervous that their most vulnerable customers are both their most valuable and their greatest risk.

Japan’s Financial Services Agency predicts that $2 trillion in personal financial assets, or over 10% of the nation’s total, will be in the hands of people with dementia by 2030.

Unsurprisingly , 78% of the cases dealt with by the Japanese police involving personal scamming, related to the over 65s. 

So far, Japanese financial technology  has been employed mainly to protect the elderly. One bank  is developing an app whose end goal is to identify early signs of cognitive decline by analysing spending patterns using open banking data. The app will also send out alerts to family members if it detects unusual spending, in order to protect them from fraud.

Where there are families to manage the situation, such software is helpful, but the deeper problem lies with the elderly who live alone and without family.

Vast amounts of capital has poured into creating payment systems and financial products for millennial users, but the sector as a whole has often neglected their parents and grandparents — who, in reality, own far more assets.

There are thought to be two reasons for this. Firstly, there is an enduring belief that the over 65s don’t “do tech” . Secondly, the Japanese banking sector clinging to its branch banking network . Ironically, the branch network becomes increasingly  inaccessible as customers age.

The issue is creating frustration amongst Japanese Fintechs. I hear this frustration echoed in the UK. But I side with one Japanese commentator whose opinion is

“If you’re a Fintech and people can’t use your product because they don’t understand it, it’s not their problem, it’s your problem, because your solution is not good enough”.

The problem  is not unique to Japan, just more acute.  Older people are always the main clients of financial services because they are the ones with money. If they become unable to transact, it means the industry loses its most important customer base.

In the UK , most pensioners don’t use financial advisers. As in Japan, it’s isolation from good support that gives the fraudster the opportunity

Advisers often talk of “succession” in terms of giving customers more of the same. In practice, customer’s needs change with age – shouldn’t we be thinking of succession in our ageing customer’s terms?

One Japanese friend likened banks’ response to ageing customers as boiling a frog. The water warms so slowly that the frog never knows it’s in trouble – and then the frog is dead. 

Conversations I have in the UK with Fintechs like Multiply AI and Abaka, focus on how to use technology to engage the millennials.  This is of course the easiest group to engage with, but it may not be the most urgent.

The fastest growing Facebook demographic is grandparents, where elderly people see the need – as in speaking to their grandchildren, they become technologically adept. The challenge of the financial services industry is to find ways to get elderly clients to feel that need.

Whether the purpose of technology turns out to be fraud protection, or – more positively – to enable older people to cope with the issues of later life – we need to find better products that they can use.

By way of example, my Mum has learned to text only after she got her mobile provider to find her a large key phone.

At 87 she is now sure of what she is doing and finding ways to my children’s hearts with the sweetest of messaging. Pentech needs large keys!

Empowering their old to manage their finances using technology, may not solve the problems of the “pensioner crime wave”, which appears to be more about loneliness than penury.

But it may go some way to including older people into the society they feel excluded from. There are easier ways to find other people than prison, and technology can help there too.

mum - window

My Mum

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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